1. Hon ANNETTE KING (Deputy
Leader—Labour) to the Minister of
Finance: When he said recently “where the
Government does have some influence, we are working hard to
keep prices low”, which prices was he referring
to?

Hon BILL ENGLISH (Minister of
Finance): I was referring to specific examples,
such as interest rates. We have worked hard to control
Government spending, so that we do not put upward pressure
on interest rates. Floating mortgage rates are about 5
percent below where they were at under the previous
Government. With regard to the emissions trading scheme, we
have put in place a system that halved the costs of the
emissions trading scheme. In electricity, we have increased
competition so that households do not face a 72 percent
price rise, as they did up to 2008. We have worked hard to
bring the out-of-control ACC scheme under control, so that
levies do not have to keep increasing.

Hon Annette
King: If, as he claimed on Sunday, the Government
is working hard to keep prices low, why did he allow
Government-controlled prices such as car and motorbike
registration, ACC levies, early childhood education fees,
GST, and the cost of doctors’ visits, to name but a few,
to go up at a time when economic commentators are saying
households could face a period of significant misery in New
Zealand?

Hon BILL ENGLISH: We have had to
strike a balance between recognising that pressure on
households on the one hand, and cleaning up the mess left by
the previous Labour Government— for instance, the car
licensing system was tens of millions of dollars in deficit.
We are doing our best to close that massive deficit in the
car licensing system without passing on all the costs to
licence holders.

Hon Annette King: What
action will the Government take to control petrol prices now
that they have reached $2.15 a litre, which is something
National demanded that the previous Government do when the
price reached $2.03 a litre, and which is something that
while in opposition National thought obviously the
Government could do something about?

Hon BILL
ENGLISH: Unlike the previous Labour Government, we
do not claim to be able to control everything. Consumers and
households are doing their best to deal with rising oil
prices. As the member knows, the Government does not have
too much influence over Colonel Gaddafi, but maybe the
Labour Party does.

Hon Annette King: What
action will the Government take to reduce the cost to New
Zealand families of milk, which has gone up by 37c a 2 litre
bottle, given that John Key said in 2008 that families had
to ration milk to their children because of the price and
that the then Labour Government should do something about
it?

Hon BILL ENGLISH: As the member will
know, New Zealand is a beneficiary of high commodity prices.
More people want to pay us more for more of our product than
ever before, and some of those prices are reflected in
domestic prices.

Chris Tremain: What is
the outlook for inflation, and how does this compare with
past inflation?

Hon BILL ENGLISH: Of
course, there has been a spike in inflation because of the
increase in GST, but, if we look at Reserve Bank forecasts
for this calendar year, we see it projects there will be
inflation of 2.3 percent; in 2012, of 2.2 percent; and in
2013, of 2.5 percent. Over those 3 years, the rate in each
year is about half the rate that inflation was at in 2008
when Labour left office, which is why no one believes the
Labour members when they complain about rising
prices.

Hon Annette King: If New
Zealanders are better off following the tax cuts and the
wage increases, as he constantly claims, can he explain why
people are feeling the impact of food, grocery,
accommodation, insurance, and petrol rises at the fastest
rate in almost 20 years, and does he believe that people are
just making it up when they say they are facing a struggle
at this time?

Hon BILL ENGLISH: They feel
those prices because they are out there every day doing
their shopping and paying their bills. They have not all had
significant wage increases, but they have had after-tax
increases in their wages. The member seems to be going down
the track of, I think it was, the Herald on Sunday, which
tried to claim that inflation was at the same kind of rate
it was at back in the mid-1980s when it was actually 17 or
18 percent. Current inflation is actually around 2 to 3
percent.

Earthquake, Christchurch—Effect on
Government Finances

2. DAVID BENNETT
(National—Hamilton East) to the Minister
of Finance: What are some of the likely impacts on
the Government’s finances of the Christchurch
earthquake?

Hon BILL ENGLISH (Minister of
Finance): First of all, as the weeks go by we are
getting better information about the costs of the
earthquake, but a couple of things are clear already. The
first is that the earthquake is likely to delay slightly the
New Zealand Government’s return to Budget surplus, and,
secondly, that meeting the Government’s share of the
immediate earthquake costs will require quite a substantial
front-loading of Crown debt in the next year or two—that
is, to meet costs such as the wage support package, the
rescue and recovery costs, and transitional housing. It
means the Government will have to borrow more over the next
couple of years. Therefore, it is important that we put in
place a plan to get our debt back to acceptable
levels.

David Bennett: What will be the
impact on likely fiscal deficits and net Crown debt as the
Government meets the immediate costs of the
earthquake?

Hon BILL ENGLISH: When the
Prime Minister delivered his Prime Minister’s statement
earlier in the year, he said that the Government intended to
get back to Budget surplus in 2014-15. Now, with the effect
of the earthquake and the need to borrow to fund those
costs, the surplus is now more likely to occur in 2015-16.
It looks as though our deficit before gains and losses could
be more than 8 percent of GDP, which amounts to around $16
billion. In December we announced a revised forecast of $11
billion, which is likely to increase. Net Crown debt is also
likely to rise, from around the forecast 28 percent of GDP
in 2014 to around 30 percent.

Hon David
Cunliffe: What percentage of the additional
expected $4.9 billion increase above the forecast in the
operating deficit before gains and losses for this year is a
result of the stalled economy, which New Zealand has been
suffering from since as early as June 2010, well before the
earthquake hit Canterbury?

Hon BILL
ENGLISH: I could not give the member an estimate of
the exact proportion, but a significant proportion of the
increased deficit this year will be just the immediate cash
costs of the earthquake. Some of it will be reduced tax
revenue because of the stall in economic activity in
Christchurch, and some of it—who knows, maybe a quarter or
a third—could be because of a slower economy, which was
happening regardless of the earthquake.

David
Bennett: What will be the basis of decisions about
the Government paying its share of earthquake costs and
ensuring that net Crown debt returns to pre-earthquake
levels?

Hon BILL ENGLISH: The Government
will continue with its considered and consistent way of
making decisions on economic issues. The Government has made
the decision that because it is impractical to find
short-term, large-scale savings in public spending, we will
be borrowing to cover the costs of the earthquake. Any other
changes we make in Government spending will be made on their
merits rather than just because we need to fund the
earthquake recovery.

Hon John Boscawen:
Does he think that revenue raised from mining schedule 4
land would mitigate the financial effects of the
Christchurch earthquake; if so, what actions will the
Government take to explore mining on schedule 4
land?

Hon BILL ENGLISH: The Government
has explored that option. There is no doubt, though, that
the effort that has been put into getting petroleum and gas
resources on the list for exploration companies could yield
more revenue in the future, and that would help us repay the
debt that we will incur in the next year or two on the
Christchurch reconstruction.

Hon John
Boscawen: Does he think that the comments of the
Minister of Energy and Resources on 26 August 2009 that no
mining on schedule 4 land had potentially “denied
significant opportunity for economic benefit at both a
national and regional level” are more relevant now that
the economy is struggling with the effects of the
Christchurch earthquake?

Hon BILL
ENGLISH: It is not the Government’s intention to
revisit the conclusion of the debate on schedule 4, but that
does not mean we cannot have a strong and growing economy in
the future. In fact, in the regions high commodity prices
will begin spilling over into the domestic economy in the
next 12 or 18 months, and, despite the fact that they cannot
mine schedule 4 land, I think that part of the economy will
start growing with some strength.

Economic
Development, Acting
Minister—Statements

3. Hon DAVID PARKER
(Labour) to the Acting Minister for
Economic Development: Does he stand by all his
statements on economic development?

Hon DAVID
CARTER (Acting Minister for Economic Development):
I stand by all statements I have made as Acting Minister for
Economic Development.

Hon David Parker:
When he said in Parliament yesterday: “We want to invest
in innovation— Labour opposes that.”, was he referring
to the research and development tax credit that Labour
introduced and National scrapped, or to National’s other
cuts to innovation?

Hon DAVID CARTER: I
was referring particularly to the Primary Growth
Partnership, which has been in action now for 18 months. We
have seen $475 million worth of projects get under way. That
sort of innovation spending is serious spending. It is not
like the phoney schemes that Labour used to
announce.

Hon David Parker: When the
Minister said yesterday: “We intend to improve
skills—Labour opposes that.”, was he referring to the
$55 million that his Government cut from industry training
in the last Budget?

Hon DAVID CARTER: I
was referring particularly to the work of my colleague the
Hon Anne Tolley, who is trying to address the serious
situation in New Zealand, where a large number of
schoolchildren leave school without the ability to
adequately read and write. That is the legacy that that
member and his Government left.

Hon David
Parker: When the Minister said yesterday: “We
need to improve trade opportunities.”, was he referring to
the need created by his Government’s lack of an adequate
economic plan, which has resulted in unemployment increasing
by over 50,000 people since he took office, and the second
recession—National’s recession?

Hon DAVID
CARTER: No. Again, I was referring to the excellent
work by my ministerial colleague the Hon Tim Groser and the
work he is doing on trade negotiations with Malaysia, Hong
Kong, the Gulf States, the Trans-Pacific Partnership, Korea,
and Russia.

Hon David Parker: Why,
instead of ineffectually trying to blame others for the
Government’s failure, will he not take responsibility and
admit what many business commentators are saying— namely,
that the second recession is National’s responsibility and
that its management of the economy is lacklustre and
failing?

Hon DAVID CARTER: I note that
when Mr Parker raises the many business commentators, he
never manages to mention them by name, so I suspect many of
them are his left-wing, loony mates.

Earthquake,
Christchurch—Accident Compensation
Claims

4. Dr JACKIE BLUE (National)
to the Minister for ACC: How many
claims has ACC received since the tragic earthquake on 22
February and what steps has the Government taken to
facilitate prompt compensation for those seriously
injured?

Hon Dr NICK SMITH (Minister for
ACC): As at this morning, 5,907 claims had been
received. These claims included over 3,000 soft tissue
injuries, 1,010 lacerations, 437 fractures, 419 neck
injuries, 183 head injuries, 47 burns, and six amputations.
The lunchtime earthquake created uncertainty about whether
injuries were workplace or non-work accidents. The
difference determines whether the employer or the employee
meets the cost of the first week’s compensation. The
Government has decided, through a special Order in Council
for ACC, to pay this first week, which benefits both
employees and employers and removes any debate at this
difficult time.

Dr Jackie Blue: Has the
Minister received any estimates of the costs of accident
compensation claims from the 22 February earthquake; if so,
are these costs likely to impact on current and future
levies for the scheme?

Hon Dr NICK SMITH:
The 22 February earthquake will be the accident compensation
scheme’s largest-ever single event involving claims. Its
latest estimate of the total number of claims is 7,500, and
this has enabled an update on the estimated lifetime costs,
at approximately $200 million. This estimated cost needs to
be considered in the context of claim costs per year of
about $3 billion. ACC has worked very hard over the past 2
years to improve its financial position, and I am hopeful
that the cost of the earthquake claims will be able to be
met without any levy increases.

Chris
Hipkins: Will the cost of providing the first week
of income compensation under the scheme, which he has
announced, be funded through the ACC work account; if not,
how will it be funded?

Hon Dr NICK SMITH:
For those who were seriously injured, who will be eligible
for that extra week of compensation, that funding will be
taken from either the earners account or the work account,
in exactly the same way that the future week’s
compensation will be. I note that a higher proportion of
claims than the overall average for ACC are actually in the
work account. That is not surprising, given that a large
number of people would have been at work at the time of the
earthquake, and given the number of people injured in the
central business district of Christchurch, where there would
have been a higher proportion of working
people.

Dr Jackie Blue: Are foreign
nationals who were injured in the 22 February earthquake and
the families of the deceased eligible for support from
accident compensation, and what endeavours have been made to
ensure that they are well informed of their entitlements
under the scheme?

Hon Dr NICK SMITH: Yes.
At the core of our unique no-fault, 24/7 scheme is automatic
entitlements for everyone, including overseas visitors, as
the trade-off for the loss of the right to sue. Foreign
nationals who have been injured are eligible for emergency
care, treatment, and rehabilitation in New Zealand and for
lump-sum compensation for significant injuries. Income
compensation is also available if the foreign nationals were
working and paying tax and ACC levies in New Zealand.
Families of the bereaved are eligible for a funeral grant.
Dependants of the deceased may also be eligible for a
survivor’s grant and income compensation if the deceased
was working and paying taxes and ACC levies in New Zealand.
The accident compensation scheme does not differentiate
based on which country a foreign national comes from, nor
should it.

Earthquake, Christchurch—Entry into
Central Business District Red Zone

5. Hon
MARYAN STREET (Labour) to the Minister of
Civil Defence: What is the basis for according
priority to entry of the red zone in the Christchurch
central business district?

Hon JOHN CARTER
(Minister of Civil Defence): The priority that the
national controller accords is safety first, and needs
second.

Hon Maryan Street: How many
business owners and residents are still unable to access
their offices and homes in the red zone?

Hon JOHN
CARTER: I do not have that information to hand. The
member can put the question in writing if she wishes to find
out that information.

Hon Maryan Street:
How many business owners could have been given access to
equipment and records that are vital to restarting their
businesses, if time and resources had not been diverted to
escorting the Prime Minister through the red zone on
repeated occasions?

Hon JOHN CARTER: That
is such a silly question that I am not sure how to answer
it, other than to say the controller gives priority to the
appropriate people to enter the red zone when
necessary.

Hon Maryan Street: Then how
does the Government explain its priorities to the people of
Christchurch and the business owners of Christchurch, when
repeated access for the Prime Minister appears to be taking
precedence over access for business owners and central
business district residents?

Hon JOHN
CARTER: The controller is very aware of the needs
of all the business people and business owners and is doing
an outstanding job, as far as I am
concerned.

Earthquake, Christchurch—Government
Support for Non-governmental
Organisations

6. NIKKI KAYE
(National—Auckland Central) to the
Minister for Social Development
and

Employment: What support is
the Government giving to non-governmental organisations in
Christchurch affected by the earthquake?

Hon PAULA
BENNETT (Minister for Social Development and
Employment): A lot of hard work has gone in very
quickly. Funding coordination and facilities have been
provided. On the Friday directly after the earthquake the
Prime Minister, the Deputy Prime Minister, and I had a
conference call with 17 major non-governmental organisations
to work through what support is needed and how we can help.
To help we have also hired the Christchurch netball
clubrooms at Hagley Park for non-governmental organisations
to use as needed.

Katrina Shanks: What
other Government support has been available in
Christchurch?

Hon PAULA BENNETT: We have
used the Community Response Fund underspend to ensure
continuity of payment for those non-governmental
organisations that need it; we did that really quickly. A
key focus has also been trauma counselling. We have 262
counsellors on the ground and others around the country. We
will also have a number of counsellors and welfare
volunteers at the memorial service tomorrow—350 in total.
And, of course, the Student Volunteer Army has been out in
great force. We were able to provide them with $20,000 worth
of funding.

Hon Annette King: Will she
oppose the recommendation from the Hon Tariana Turia to cut
funding for Te Rito Family Violence Prevention Strategy and
from the Child Advocacy Group’s budget, in light of the
report from the Minister of Women’s Affairs of increased
family violence after the earthquake?

Hon PAULA
BENNETT: Budget bids are yet to be assessed by
Cabinet. They will be made in due
course.

Earthquake, Christchurch—Rugby World Cup
Matches

7. Hon TREVOR MALLARD
(Labour—Hutt South) to the Prime
Minister: What role did he or his department play
in the decision to shift the Rugby World Cup quarter-finals
from AMI Stadium to Eden Park?

Hon MURRAY McCULLY
(Minister for the Rugby World Cup) on behalf of the
Prime

Minister: Under
the terms of the host union agreement, all decisions
relating to locations and venues for Rugby World Cup games
are the province of Rugby World Cup Ltd, a subsidiary of the
International Rugby Board. With regard to the decision to
move all Rugby World Cup games from Christchurch, the
International Rugby Board, through Rugby World Cup Ltd,
publicly signalled its wish to consult other stakeholders,
including the Government. This consultation occurred through
the Minister for the Rugby World Cup, who discussed these
matters with the Prime Minister. With regard to the decision
to select Eden Park as the alternative quarter-finals venue,
the Prime Minister understands that this decision was made
by Rugby World Cup Ltd on the recommendation of Rugby New
Zealand 2011, on the basis of considerations outlined by Mr
Martin Snedden yesterday. The Government was informed, but
not consulted, in relation to that decision.

Hon
Trevor Mallard: Did the Prime Minister’s office
receive a report on or before 7 March that made it clear
that there would not be sufficient accommodation in
Christchurch for the quarterfinals?

Hon MURRAY
McCULLY: I would need to check on which reports
were received on which dates. But I can say that reports
were received continuously in relation to accommodation from
two different sources: firstly, Ministry of Economic
Development officials were asked to assess the situation and
report to the Government from time to time; and, secondly,
Mr Snedden, as the chief executive of Rugby New Zealand
2011, made his own assessment, which was reported to the
Government from time to time. To be more precise, I would
need to check those reports.

Hon Trevor
Mallard: When did the Prime Minister become aware
that an in-principle or provisional decision had been made
to shift the quarter-finals to Auckland before Rugby World
Cup officials began their trip to New Zealand?

Hon
MURRAY McCULLY: The Prime Minister was not aware
that any decision was made, as asserted by that member. The
Prime Minister was aware that officials from the
International Rugby Board were coming to New Zealand for the
purpose of meeting the other stakeholders, formally
consulting, and then making a formal decision in relation to
the games scheduled to be played in
Christchurch.

Hon Trevor Mallard: Why did
the Prime Minister, as recently as yesterday morning, hold
out hope to the people of Christchurch that the
quarter-finals would be held there, when an informal
decision, as the Minister has just replied, had been made
that they would not?

Hon MURRAY McCULLY:
The Prime Minister was acting on the advice of the Minister
for the Rugby World Cup. The Minister for the Rugby World
Cup was told on Monday of this week that the board of Vbase,
the Christchurch City Council - owned company that
administers AMI Stadium, was receiving a briefing from the
engineers who had done their scoping work over the previous
days. That meeting, I repeat, occurred on the afternoon of
Monday this week. On Tuesday of this week the Minister for
the Rugby World Cup went to Christchurch to meet Vbase, to
receive details of that report and to enter into
discussions, and on the following day—yesterday—the
parties all met, including the visiting International Rugby
Board executives, to make the final decisions.

Hon
Trevor Mallard: Why was the Prime Minister not
involved in the announcement of the decision to shift the
quarter-finals from Christchurch to Auckland?

Hon
MURRAY McCULLY: The Prime Minister has enormous
confidence in his Minister for the Rugby World Cup. He was
aware that that Minister was keeping himself closely
informed of developments in Christchurch, and was visiting
Christchurch on Tuesday. The Prime Minister would not have
been aware in time of the meetings taking place yesterday to
shift his timetable in order to be there, if he had wanted
to. But his attendance might well have been taken by his
Minister for the Rugby World Cup as an indication of a lack
of confidence—which would have been disappointing.

Hon Trevor Mallard: Who, if anyone, advised
him that attending to matters in his room was a higher
priority than attending Parliament while questions on this
matter were being dealt with yesterday?

Hon MURRAY
McCULLY: I think that at the heart of the
member’s line of questioning is the suggestion that
somehow the decisions should have been made sooner and
announced sooner. I want to repeat what I have said
publicly. The people of Christchurch, who take great pride
in their rugby prowess, have suffered a significant tragedy.
The decision to take away from Christchurch all of the Rugby
World Cup games was made most reluctantly by all of the
parties who were consulted by the International Rugby Board.
For the member to suggest that somehow that decision, which
was indeed hurtful, should have been made without all of the
evidence being assembled and properly considered by those
parties is, frankly, an insult to the people of
Christchurch.

Hon Trevor Mallard: I raise
a point of order, Mr Speaker. That was a very long answer to
a question that was not asked. It was a very clear question
as to whether the Prime Minister was advised not to attend
Parliament yesterday and to stay in his office. That
question was not answered.

Mr SPEAKER: If
the Minister wishes to answer it further, I will sit down in
a moment. But let me point out that it is against the
Standing Orders to make any reference to the absence of a
member from this House. I did not rule the question out of
order, because I wanted the Minister to have the opportunity
to handle it in the way that he saw fit. I do accept that he
did not answer the particularity of the question, but the
question is a pretty marginal one anyhow. If the Minister
has anything further that he wishes to add to it, I do not
want to prevent him from doing that.

Hon Trevor
Mallard: I raise a point of order, Mr Speaker. I
invite you to review the tape. The question was very
carefully drafted. It gave no indication of whether the
Prime Minister accepted that advice, if it was
received.

Mr SPEAKER: That is a very fine
line that the member points out. The implication of the
question was that the Prime Minister was not present in the
House. But I do accept the point the member makes that the
question did specifically ask who had advised the Prime
Minister—I cannot remember the exact wording. If the
Minister could deal with the actual particularity of the
question, that would be helpful.

Hon MURRAY
McCULLY: The Prime Minister is perfectly capable of
making decisions about his own diary and timetable without
advice. Right at this minute the Prime Minister is extremely
busy attending to important matters of State that are the
result of some very tragic events that have occurred in New
Zealand in recent times. That causes the Prime Minister to
think very carefully about the allocation of his valuable
time.

Hon Trevor Mallard: Did he
personally deal with all the paperwork received in his
office on this issue, or did he treat it, as he claimed to
have done with the BMW issue, as a matter for his chief of
staff to take responsibility for?

Hon MURRAY
McCULLY: The Prime Minister, as I indicated in my
primary answer, has taken considerable advice from his
Minister for the Rugby World Cup on this matter. That
Minister has been closely engaged in dealing with the
parties over recent weeks, and, as appropriate, has seen fit
to inform the Prime Minister of developments as matters have
proceeded.

Hon Annette King: Can the
Prime Minister explain why the Hon Steven Joyce, who
answered questions on this issue in the House yesterday
after the announcement was made, said on radio yesterday
morning that no decision would be made for 2
days?

Hon MURRAY McCULLY: I am not
familiar with the particular quotation that the member
refers to, but I can say the Minister of Transport was
answering questions yesterday, as I understand it, on behalf
of the Minister for the Rugby World Cup, who was, I can
confirm, consulting relevant parties in Christchurch.

Corrections System—Private Sector
Investment

8. JACQUI DEAN
(National—Waitaki) to the Minister of
Corrections: What progress has been made toward the
Government’s commitment to encourage private sector
investment in the New Zealand corrections
system?

Hon JUDITH COLLINS (Minister of
Corrections): I am very pleased to report that
three private sector consortia have been invited to tender
for the provision of a new men’s prison at Wiri through a
public-private partnership. The new facility will ensure
that there are enough beds to cope with the forecast growth
in prisoner numbers and the need to replace ageing prisons.
The three consortia are led by experienced international
prison management companies and each one includes a major
New Zealand construction partner. A number of other New
Zealand firms are members of, and advisers to, the
consortia. It is expected that a final contract with the
successful consortium will be in place by July
2012.

Jacqui Dean: What benefits will the
new prison bring to the local community and to the wider
region?

Hon JUDITH COLLINS: The 960-bed
prison is a major project for the Auckland region and will
bring significant economic benefits to the local community.
It is expected that the development will inject
approximately $1.2 billion into the region’s economy over
the next 30 years. The construction and ongoing operation of
the prison is expected to sustain 1,900 jobs and inject
approximately $100 million in wages and salaries into the
construction sector.

Earthquake,
Canterbury—Trade Skills Training
Policy

9. Hon DARREN HUGHES (Labour)
to the Minister for Tertiary
Education: What specific policy changes has the
Government made to increase the number of apprenticeships
and other building skills training programmes since the
September Canterbury earthquake?

Hon PAULA BENNETT
(Minister for Social Development and Employment) on
behalf of the Minister for Tertiary
Education: Following the September earthquake the
Government first ensured that there were sufficient funded
places to meet immediate demand for trades training.
Government agencies commenced work with the Canterbury
Employers’ Chamber of Commerce to develop skills
requirements for the rebuild. Following the obviously much
more damaging February earthquake the Tertiary Education
Commission and other agencies, both Government and non-
Government, are revising workforce planning and are in the
process of mapping available provision and capacity from
tertiary education institutions, private training
establishments, and industry training organisations. We will
see a move from other disciplines into trades that will now
be in higher demand and we will increase places for trades
training as required.

Hon Darren Hughes:
Does that mean that he has taken papers to Cabinet
specifically suggesting an increase in the number of
apprenticeships and other building skills training
programmes since the September earthquake?

Hon
PAULA BENNETT: No. As far as I am aware there is
still capacity there. In fact, the reason that the Minister
is not here is that he is at Christchurch Polytechnic
Institute of Technology today, where they are already saying
there is capacity for trades training and they could take
people as of today. They ask people to get in touch with
them about that.

Hon Darren Hughes: Does
the increase in demand for tradespeople in Christchurch
following the two devastating earthquakes, which the
Minister referred to, mean that the Government will restore
the $55 million it cut from industry training last year, or
does it still believe that funding for training will be
underutilised?

Hon PAULA BENNETT: It is
important that we go through this step by step. At the
moment a consortium of businesses in Christchurch is getting
together to analyse what skills will be needed. I know that
the Minister has also been talking to the Minister for
Social Development and Employment, and through Vote
Employment they have been doing a skills analysis of what
will be

needed. As those analyses are done—without
getting ahead of ourselves as to what the need will
be—there should be a true assessment of that
need.

Hon Darren Hughes: When will the
House know whether there will be an increase in the numbers
of actual apprenticeships and of people involved in other
building skills training programmes, given that the building
and construction industry training organisation was saying
before the two Christchurch earthquakes that demand for
building and construction workers was likely to increase
dramatically if the country came out of
recession?

Hon PAULA BENNETT: No one is
under any illusion that there will not be a demand for those
skills; there will obviously be a demand for them. We are
analysing the capacity and what will be needed. We are doing
that through a step-by-step planning
process.

Dairy Industry—Wholesale and Retail
Milk Market

10. SUE KEDGLEY (Green)
to the Minister of Commerce: Will
he use his powers under Part 4 of the Commerce Act 1986 to
call for an investigation into the dairy wholesale and
retail milk market, following the release of the Ministry of
Agriculture and Forestry’s review of the domestic milk
market in New Zealand; if not, why not?

Hon BILL
ENGLISH (Deputy Prime Minister) on behalf of the
Minister of Commerce: The Commerce
Commission can, of course, on its own initiative, undertake
an inquiry under Part 4 or an enforcement investigation if
it has concerns. In respect of the Minister’s powers to
initiate an inquiry, that capacity under Part 4 of the
Commerce Act is related to concerns about monopolies. There
would need to be a pretty tough test applied to make an
inquiry justified.

Sue Kedgley: Does he
agree that competition in New Zealand’s dairy wholesale
market is limited by the fact that there are just two major
players, Fonterra and Goodman Fielder, and that Goodman
Fielder is required to purchase all its milk from its
competitor, Fonterra?

Hon BILL ENGLISH:
The member will be aware of the history of the structure of
our domestic milk market. Going back to the formation of
Fonterra in the early 2000s, there was agreement at the time
to limit Fonterra’s capacity to be a domestic monopoly.
Fonterra was required to sell some assets at the time, and
for most of the last 10 years I think we have all been
generally happy that there has been a sufficiently
competitive domestic milk market. But clearly Fonterra has
an interest in ensuring that the domestic milk market does
not undermine its export strength.

Sue
Kedgley: Does he agree that a company that controls
around 95 percent of the market for dairy products has a
virtual monopoly on the market and therefore has no
incentive to minimise prices; if not, why not?

Hon
BILL ENGLISH: I am not sure whether it controls 95
percent of the domestic market. It certainly controls a very
significant proportion of the export market. There have been
ongoing discussions in the context of dairy regulation
between the Government and Fonterra about issues such as the
transparency of milk pricing. I think we are all aware that
New Zealand consumers must be protected from the potential
for dominance of the market by Fonterra, and I believe up
until now that both the previous Government and the current
Government have acted to protect consumers.

Sue
Kedgley: Does he agree that the fact that we have a
virtual milk monopoly selling to a supermarket duopoly may
be contributing to the high price of milk and requires
further investigation; if not, why not?

Hon BILL
ENGLISH: The arrangements around Fonterra certainly
need to be kept under scrutiny continuously because there is
always the potential that such a large company could
influence the domestic market. However, there is not a lot
of evidence that they have been behaving in a monopolistic
manner. The market seems to have worked reasonably well over
the last 10 years but I think it is natural that when prices
rise, consumers are asking the question and we need to be
able to demonstrate to them that they are protected.

Sue Kedgley: Does he agree that in a
concentrated market dominated by a very small number of big
players there needs to be scrutiny of how retail prices are
set, so that consumers can be confident that the prices they
are paying are fair?

Hon BILL ENGLISH:
Yes.

Rahui Katene: Is he aware of the
advice from the company Miraka Ltd, the majority of which is
Māori-owned, that it saw the Ministry of Agriculture and
Forestry and the Commerce Commission as playing a kaitiaki
role in terms of ensuring fairness within the system, and
what assurance can he give the House that fairness for
consumers will be prioritised to protect New Zealanders from
suffering further price increases on dairy products such as
milk, cheese, and butter, which have already increased in
price by 19.7 percent on average over the past 3
years?

Hon BILL ENGLISH: Miraka, as
others, would expect the Commerce Commission and the
Ministry of Agriculture and Forestry to be guardians of the
consumer interest, and in this circumstance the Commerce
Commission has the power to initiate an inquiry if it thinks
there are grounds for doing so. I would say that an increase
in prices of itself is not evidence of monopolistic
behaviour. In this case it is plausible at least to believe
that the sharp increase in export prices for dairy products
is the main reason for the increase in the domestic milk
price. If there is significant evidence that the price is
being manipulated, then the Commerce Commission has the
ability to inquire into that.

Sue
Kedgley: Given growing consumer concern about the
high price of milk, does he agree that an investigation is
needed to see whether there is any evidence that high milk
prices are a result of either insufficient competition in
the sector or a dominant player abusing its market position
and passing excessive margins and costs on to New Zealand
consumers?

Hon BILL ENGLISH: As I have
said, the Commerce Commission has the power to initiate an
inquiry if it thinks there are grounds for it. A Minister
can potentially initiate an inquiry. In both cases an
increase in prices is not evidence in itself of market
manipulation. But if there was significant evidence, then
either the Minister or the Commerce Commission, I am sure,
would consider it.

Sue Kedgley: Has he
seen claims by farmers that they receive less than 30
percent of the price of the milk; and does he not think,
therefore, that there ought to be a Commerce Commission
investigation into what makes up the remaining 70 percent of
the retail price?

Hon BILL ENGLISH: It is
a time-honoured tradition among farmers to complain about
the small proportion of the total price that they receive,
and it has been going on for as long as I can remember. I do
not expect that it will ever change, regardless of the
market prices. But, again, I do not think that that in
itself is evidence that the market is being manipulated, but
I think we agree that we need to be very vigilant when there
is such a major company with a large market share. If there
is evidence that a company is manipulating the prices
against the interest of consumers, then the Commerce
Commission has the capacity to look into
that.

Women’s Affairs, Ministry—Minister’s
Support for Independence

11. CAROL
BEAUMONT (Labour) to the Minister of
Women’s Affairs: Does she support the retention
of the stand-alone and independent Ministry of Women’s
Affairs?

Hon PAULA BENNETT (Minister for Social
Development and Employment) on behalf of the
Minister of Women’s Affairs: I support
the Ministry of Women’s Affairs. However, the Government
has made it clear that it is focused on achieving greater
value and excellence out of public services, so all
Government agencies will continue to be under scrutiny. Kia
ora.

Carol Beaumont: Why did she fail to
rule out the merger of the ministry with another department,
and state on Te Karere that she was not concerned about the
Ministry, because the main aim of the National Government is
that women manage their own initiatives and the Government
is there to support?

Hon PAULA BENNETT:
I certainly stand by that statement. I also refer to the
Prime Minister’s statement, where he said: “this
Government is building better outcomes from public services
by being clear about New Zealanders’ priorities, by
minimizing waste, scaling up what works, getting rid of what
doesn’t …”.

Carol Beaumont: What
advice has the Minister sought from her ministry about jobs
and training for women in Christchurch?

Hon PAULA
BENNETT: We are certainly looking at what the needs
for women there are. The Minister has spoken to the Minister
for Social Development and Employment, particularly around
work for those who are stuck at home and are having problems
with childcare and things as well.

Carol
Beaumont: Does she see the rebuild that is required
in Christchurch as an opportunity to make significant
progress on the ministry’s goal of getting more women into
traditional trades; if so, what action is she taking to
ensure this happens?

Hon PAULA BENNETT: A
woman can handle a hammer just as a well as a man and there
is certainly room for them in jobs in
Christchurch.

12. JOHN HAYES
(National—Wairarapa) to the Minister of
Agriculture: What steps has the Government recently
made to progress agricultural greenhouse gas
research?

Hon DAVID CARTER (Minister of
Agriculture): Last week Mr Groser and I were
pleased to announce that as part of New Zealand’s efforts
with the Global Research Alliance on Agricultural Greenhouse
Gases we have established a major new programme. The Global
Research Alliance Senior Scientist Award will support
scientists from alliance countries to undertake exchanges on
research programmes into agricultural greenhouse gas
mitigation. Those programmes last for 6 months. This is a
great example of the alliance getting down to the
challenging task of tackling agricultural
emissions.

John Hayes: What is the aim of
the Global Research Alliance Senior Scientist
Award?

Hon DAVID CARTER: It is a
practical step aimed at finding the scientific solutions to
reduce agricultural greenhouse gas emissions. It will build
capability within the New Zealand science sector in this
important area, and allow greater collaboration between
research communities right across the globe. It is just
another example of the substantial effort this Government is
putting into developing practical options to enable the
agricultural sector to reduce its greenhouse gas emissions.

Key’s endorsement of English has turned this “contest” into a race for second place.

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